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Your Billable Hour Is Wrong — Here's the Math Nobody Does
Your billable hour rate is probably wrong, and it is costing you on every single job. In this episode Derek Cormier breaks down the three mistakes almost every contractor makes when building their rate, and walks through the exact math to fix it.
Most owners build their rate on eight hours a day of billable work. They never actually get eight. Most owners use a tech's hourly wage as his real cost, when the true cost is often forty to eighty percent higher once every expense is factored in. And most owners split overhead evenly across departments that do not consume it the same way, hiding which department is actually losing money.
Derek also breaks down why install departments should never be priced off a billable hour at all, and what to use instead.
What You Will Learn: Why your billable hour is likely built on fantasy efficiency. How to calculate the true fully loaded cost of an employee. Why overhead should be allocated by department, not divided evenly. Why install departments should price by the sold day instead of the billable hour. A step by step process to rebuild your rate from scratch. How often you should be recalculating your rate.
Topics Covered: Billable hour rate. Contractor pricing. Labor cost calculation. HVAC install pricing. Overhead allocation. Sold day pricing. Home service business financials. Contractor rate setting. Trades business profitability.
Who This Episode Is For: This episode is for HVAC contractors, plumbers, electricians, and home service business owners who have never recalculated their billable hour rate, are unsure if their current rate reflects true costs, or are running their install department off a service style hourly rate.
About Escape the One Man Show: Escape the One Man Show is a podcast for contractors and trades business owners who are tired of being the bottleneck in their company. Host Derek Cormier shares the leadership lessons, systems, marketing strategies, and operational frameworks that helped build Climate Experts into a multi million dollar home service business.
Have a question you want answered on the show? Call 321-495-7788 and leave a voicemail. Your question may be featured in an upcoming episode.
Keywords: billable hour rate, contractor pricing, HVAC labor cost, install pricing, overhead allocation, sold day pricing, home service financials, contractor rate calculation, Derek Cormier, Escape the One Man Show, Climate Experts, HVAC owner podcast, contractor coach.
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By Derek CormierYour billable hour rate is probably wrong, and it is costing you on every single job. In this episode Derek Cormier breaks down the three mistakes almost every contractor makes when building their rate, and walks through the exact math to fix it.
Most owners build their rate on eight hours a day of billable work. They never actually get eight. Most owners use a tech's hourly wage as his real cost, when the true cost is often forty to eighty percent higher once every expense is factored in. And most owners split overhead evenly across departments that do not consume it the same way, hiding which department is actually losing money.
Derek also breaks down why install departments should never be priced off a billable hour at all, and what to use instead.
What You Will Learn: Why your billable hour is likely built on fantasy efficiency. How to calculate the true fully loaded cost of an employee. Why overhead should be allocated by department, not divided evenly. Why install departments should price by the sold day instead of the billable hour. A step by step process to rebuild your rate from scratch. How often you should be recalculating your rate.
Topics Covered: Billable hour rate. Contractor pricing. Labor cost calculation. HVAC install pricing. Overhead allocation. Sold day pricing. Home service business financials. Contractor rate setting. Trades business profitability.
Who This Episode Is For: This episode is for HVAC contractors, plumbers, electricians, and home service business owners who have never recalculated their billable hour rate, are unsure if their current rate reflects true costs, or are running their install department off a service style hourly rate.
About Escape the One Man Show: Escape the One Man Show is a podcast for contractors and trades business owners who are tired of being the bottleneck in their company. Host Derek Cormier shares the leadership lessons, systems, marketing strategies, and operational frameworks that helped build Climate Experts into a multi million dollar home service business.
Have a question you want answered on the show? Call 321-495-7788 and leave a voicemail. Your question may be featured in an upcoming episode.
Keywords: billable hour rate, contractor pricing, HVAC labor cost, install pricing, overhead allocation, sold day pricing, home service financials, contractor rate calculation, Derek Cormier, Escape the One Man Show, Climate Experts, HVAC owner podcast, contractor coach.